Financial Update, Year #9
Net Worth at Start (early 2008): +331K
Net Worth at End (Jan 1, 2009) : +258K
Ugh – that doesn’t look so good. What exactly happened this year?
- Home Purchase. This required 65K of funds from my taxable accounts — we put 20% down on our residence (130K) to avoid PMI. Luckily, I took these funds out in 2007 prior to the major market malfunction. When I say luckily, I mean exactly that: luckily. I simply knew we were going to be buying a place soon and therefore hoarded cash in preparation — I was not trying to time the markets.
- The S&P 500 dropped from 1400 to about 900 as the effects of the sub-prime mortgage crisis rippled through the economy. Math says this had a huge impact on any funds I had in the markets, both domestic and foreign.
- We immediately replaced a 40-year old boiler and had the house insultated and air sealed. There was a state program that subsidized the work, and the total for everything came to about 15K, 10K of which we were able to secure a 0% loan. Yes, you read that correctly. We’re just about done paying it off – it’s a bit over $100/mo. We’ve saved a significant amount of money on heating and cooling due to these improvements and I have no regrets whatsoever making these updates. Still, it was an immediate 5K out of pocket expense. The joys of home ownership…
- For the second consecutive year, I (very stupidly) did not fund my employer-sponsored 401(k). I was thinking: I want cash. If the company goes under and I can’t find work for a while, I want plenty of money available to float me. At the end of 2008, despite the market drops, I held about 75K in my taxable accounts, which was enough to last me about three years. To be clear, this was a mistake. I should have been adding as much as I could to my tax-advantaged accounts. I already had built-in buffers in the form of a) a HELOC on our property b) a working spouse who could pick me up c) some cash in taxable accounts.
- I did fund my Roth IRA — I was under income limits and it made sense.
- This is the year my net worth got split between liquidy-holdings (taxable accounts, IRAs, etc) and illiquid, i.e. the new real estate investment where I lived. I’m including the home equity in my net worth.
- Our home never dropped below the purchase price in terms of value so I’ll leave it at 650K (my share: 325K) when calculating personal equity.
Financial Update, Year #10
Net Worth at Start (early 2009): +258K
Net Worth at End (Jan 1, 2010): +374K
- The S&P pulled up from its nosedive, working from 900 back to 1200 or so by 2010 for a gain of 30%.
- I maxed my employer-sponsored 401(k) this year and also funded my Roth again.
- We did the roof on our house at a cost of 5K, and also put in replacement windows and front door for another 13K. (The door was literally rotting, this work was non-optional.)
Although I hit a new high on the net worth at the end of 2009, the progress has been alarmingly slow for the past two years. The combination of taking a salary reduction, buying a house, and getting slammed with the market collapse has me feeling as though I’ve been barely treading water for the entirety of my time with StartupVille — it’s a bit frustrating, to be honest.
But that frustration doesn’t last all that long. The markets are just about to take off.